The Class III milk and cheese price has been making larger-than-normal moves on a daily basis over the past few weeks.
“Spot cheese prices are now at the lowest level since mid-December,” says Ever.Ag Director of Risk Management Katie Burgess.
Earlier in January, the February Class III milk price was above $21 per hundredweight. This week, prices are hovering around $19. What’s to blame? Burgess says more cheese is expected to come online this year from new processing plants.
Commodity markets are also reacting to what-ifs. For example, President Donald Trump has said he wants to implement a tariff on Mexico in early February. If Mexico retaliates with its own tariffs, it would not be good news for the dairy market, Burgess explains.
“In 2024, cheese exports hit a new record high, and a lot of that was thanks to increased sales to Mexico,” she says. “From a market share perspective, Mexico accounted for nearly 40 percent of cheese exports.”
Burgess explains that a trade war with Mexico could be a problem for the market, especially with the new cheese that the U.S. will be making this year.
There are more moving parts than just the new administration. Federal Milk Marketing Orders — the milk-pricing system — has undergone changes. In June, new formulas will change how processors and cooperatives pay dairy producers.
To protect your dairy from the risks of 2025, Burgess reminds producers to consider the Dairy Margin Coverage program. Enrollment starts Jan. 29.